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Thursday, 21 September 2017

Breaking That Month-To-Month Cycle

Most people work hard to earn enough money to support themselves and their family. The national statistic of employed individuals in the UK has risen (at over 34 million people), and the unemployment rate has dropped over recent years.

But, unfortunately, many people find themselves in a horrid cycle of month-to-month living. Meaning that the money earned one month is just enough to see a person through to their next payday. This causes a multitude of issues; if one pay is less one month for some reason, it can throw off the whole balance. If a surprise bill appears during the month, or an emergency situation occurs, then it is likely that you would struggle through the rest of the month.

And the pressure can become worse when approaching birthdays and Christmas where the income has to, not only pay for the usual monthly bills, but for the celebrations too.

Living month-to-month is one of the main ways people can fall into personal debt, which is then yet another thing to chip away at your monthly income.

There are a few things that you can do to help break this cycle and to prepare for situations where you don’t have enough income to see you through one month.

Check Your Payslip

In all seriousness, when you receive your payslip do you look further than the total amount earned? Because you should be. Understanding your payslip is one of the most important things when it comes to your finances. Whether you receive a printed copy or an electronic one, the components are the same.

You need to be checking whether you are being taxed correctly by keeping an eye on your tax code - particularly if you have started a new job. Whether your holiday and sick pay has been calculated correctly - check your entitlements in your contract and with this statutory sick pay guide.

For shift workers - it is always a good idea to track your hours so that any mistakes on your payslip can be queried and backed up with evidence.

Budget

You’ve heard it a thousand times, but the only way you will be able to break the cycle is to plan out your outgoings. This way you can distribute your finances appropriately and know that everything is covered. Get into the right frame of mind and either build your own, use a template on programs like Excel or find a budgeting tool online.

Figure out your necessities and be ruthless with the extras. Do you absolutely need Netflix? If yes, then what can you sacrifice to pay for it? For the first few months, there may not be much wiggle room, if any at all. By cutting the luxuries out, you are able to save a set amount each month, which will give you a cushion to work with later on to afford the occasional treat.

Bank Accounts

While you are looking at your finances, look at your accounts too. Open up a high interest savings account, if you don’t already have one, and set up a standing order for your pay-day for a set amount of money. This may be as little as £10 a month, but over the year you may find you can add a bit more here and there and will add up to a nice amount.

You might, also, want to think about opening a second account purely for bills to leave from. Send over the money to cover the bills on payday, and then you don’t have to worry about it. And what is left in your regular account can be used for things like food and fuel, and any little luxuries you have allotted yourself this month.

Double Check Suppliers

You can’t switch companies halfway through a contract, but it never hurts to shop around while in one. Being prepared with another offer helps when the time comes to renew your contract. Look at comparison websites for deals. It’s easier to say know when you have a plan than when it catches you unaware. Quite often companies like your broadband provider will try and offer you a deal when they hear you are leaving for a competitor.

Which doesn’t mean that you should make up offers - the salesperson has access to the same information as you do. And remember that you don’t have to say yes straight away - while on the phone, write down the details of the offer, take the seller’s name and ask them to call you back later. This gap will allow you time to crunch the numbers and to talk to any other bill payers in the household.

Shopping

Only buy what you need. When it comes to food shopping, buying packs of food might not always be the best option - particularly when it comes to fresh food. Create a meal plan before you go shopping if you only need two peppers all week then only pick up two peppers. Not only will this reduce your food bill, but it will lower your food waste.

Buy Christmas and birthday presents year round. Use seasonal sales to your benefit - including the January sales; there’s no better time to pick up Christmas-themed gifts or decorations at a much lower price. The same for the end of summer sales when preparing for next year.

Extras

Any extras you get, throw them into your savings. From monetary gifts for birthdays and Christmas, to work bonuses and inheritances. Add them all to your savings. This will help to pay for any holidays or days out. For emergencies and surprises.

There is also the option of asking for help off family and friends, or off the government. If you are struggling to pay for the necessities each month, then see if you are eligible for some extra government funding using this benefit guide. There are many ways in which you can receive help, from income tax credit to housing benefit.